‘Stable’ Irish renewable market has space for PPAs and CfDs

“We have a very stable political landscape that means that we have consistently stable policy that’s coming out in a very predictable [and] organic manner,” Maguire explains. “We don’t get radical shifts in policy, whether it’s the opposition or the incumbent; all political parties are aligned on a number of aspects to ensure that there is a robust regulatory framework.”

This cross-party consensus is something of a rarity, with a number of countries seeing radical shifts in their renewable energy policy landscapes upon the conclusion of an election. This was in the favour of the energy transition in the UK, where the Labour party removed the de facto ban on onshore wind upon its ascent to power in 2024, but to its detriment in the US, where president Trump aggressively slashed much of the Biden-era incentives for new renewable energy deployment.

“It’s been a very uneventful market to invest in,” says Maguire, speaking positively about Ireland. “In terms of radical changes in policy, we’ve had none. We’ve had year on year gradual improvement to deploy more and more renewables to issue a very investable proposition.”

Ireland’s ‘late-mover advantage’ drives supportive policy framework

This stability means that developers in Ireland have the confidence to plan for the long-term; as Maguire puts it, developers can “look ahead five years”, and are “quite prepared to invest” in a country that is thought to have a stable policy framework.

While Ireland does not have a significant solar sector by sheer capacity—the country passed 1GW of grid-scale solar last month, which compares to almost 10GW of such capacity in the UK—Maguire argues that the country’s relatively nascent solar industry has afforded it a “late-mover advantage”, by enabling Irish developers, investors and policymakers to learn from other industries.

“Ireland coming late to solar has meant we’ve had a late-mover advantage, where the policies that have been implemented have been based on best practice from elsewhere in EU member states and the UK, so that’s a positive,” he says.

However, Maguire notes that there is no such thing as a perfect policy framework for solar deployment, and this is true in Ireland. He says that he is “very critical” of what he describes in Ireland as “one of the lowest bars for appeal and judicial review in Europe,” which means that many solar projects are delayed by lengthy protests that, at times, do not have stable footing, which adds to the development timeframes, and ultimately costs, of these projects.

Maguire estimates that it takes an average of 32 weeks for an appeal made against a solar permit to be assessed, well above the legal timeline of 18 weeks.

“The other area is RED 3—the Renewable Energy Directive 3, that came from Europe—and how we transpose that into the Irish books,” he continues, noting that the EU’s landmark target of renewables accounting for at least 42.5% of the EU’s electricity generation by 2030 was intended to be accompanied by policies to expedite the permitting process, but that the opposite has happened in Ireland.

“The local authorities, rather than be constrained by timeframes, have insisted that rather than assess a planning application where they go back for further information—and they don’t want the timeline to be extended—they have insisted on a very high bar for the quality of permitting applications, a much higher bar than we’ve seen historically,” he explains.

“They can reject a project outright from the very start—and say ‘your project is not complete’—so RED3 has had the absolute opposite intent of the directive [and] actually slowed it up, because local authorities, rather than start the clock on the statutory applications to deliver the determination on planning, have rejected projects outright.”

The business case for BESS

While the impacts of RED3 are frustrating, this is not to say that the policy has been a complete failure in Ireland, or that the country is well behind the EU targets. In fact, last month, renewable energy met 49% of Irish electricity demand, a record figure that was accompanied by record solar generation. As a result, Ireland’s policy framework is one that is imperfect, but certainly not ineffective.

“Every year we have an auction–that’s government-run–that is effectively a two-way contract for difference (CfD) that delivers pretty good value for money to the consumer,” explains Maguire. Last month, PV Tech Premium heard from experts in Germany, Italy and France about the crucial role of government-backed auctions in delivering new solar capacity, and Maguire notes that the Irish CfD scheme is similarly effective, particularly looking to battery energy storage systems (BESS) in the future.

“What we’re seeing is requirements on developers to provide what we call ‘grid resilience’ in Ireland,” he says. “The next CfD is going to have additional weighting towards the weighting piece, meaning BESS. I think that change is happening.”

Maguire adds that there are “some moves to allow solar and BESS to come online using the same interconnection applications,” suggesting that private developers, and those involved in the planning process, are similarly keen to see support for BESS projects in the Irish energy mix. When asked about the benefits of more BESS integration into Irish renewables, Maguire notes that providing frequency response and voltage regulation are obvious advantages, but adds that BESS can provide a higher upside investment for investors than solar.

“There’s a lot of merchant risk in BESS, so it’s a different type of financial profile [and] revenue profile,” he says. “Solar has long-term contracts, [which are] very stable with single-digit returns, whereas with BESS we’re looking at double-digit returns but there’s so much more risk involved in those different revenue streams in terms of merchant risk and market exposure.”

The prospect of BESS offering greater returns on investment is crucial because, according to Maguire, “the business case isn’t there yet” for widespread solar-plus-storage. Perhaps this stems from the low contribution of solar to the overall energy mix—solar accounted for meeting just 3.3% of electricity demand in Irealdn in April—but Irish solar does not have the same penetration as, say, Spain or Germany, where batteries have become so integral to the energy mix that building standalone solar has become increasingly financially unviable.

Flexible financing options for an ‘uncertain’ world

Ireland is also notable because, according to Maguire, there is “absolutely” a place for corporate power purchase agreements (PPAs), which is somewhat rare in Europe. Analysts from SolarPower Europe told PV Tech Premium earlier this year that there should be a “complementary” relationship between corporate PPAs and government auctions as routes to funding for solar projects, following the publication of a report from the trade body that found that government auctions had become more popular than PPAs in many European countries.

However, while Maguire acknowledges that the investment landscape is different for CfDs and PPAs in Ireland, there is a space for both as the country looks to expand its solar deployments.

“There’s no question that there’s a place for corporate PPAs, absolutely,” he says. “And Ireland recently changed the legislation that if you’re building a new data centre, you must source up to 80% of your demand from new green electricity. There’s a legal obligation on the data centres to source new power.”

The data centre piece is particularly significant, considering the popularity of building new data centres in Ireland. Maguire argues that many US-based tech giants will often build their European operations in Ireland, and figures from the Institute of International and European Affairs (IIEA) forecast that, between 2024 and 2026, data centres’ contribution to Ireland’s total electricity consumption will increase from 21% to 33%.

While data centre operators are not required to source power from solar projects in particular, Maguire suggests that PPAs are of interest to these types of buyers, who will then look to acquire solar power to meet these legal obligations.

“The other thing that they’re required to do is to have 100% standby generation on-site, and that goes to the resilience and the robustness of the grid,” continues Maguire. “There’s a real drive from policy to ensure that new participants in the market that are large electricity consumers are coming with their own green electricity solution.”

Ultimately, Maguire describes the current global energy system as “uncertain”, considering the rapidly changing energy mixes of a number of regions and geopolitical concerns such as Russia’s invasion of Ukraine and the current war in the Middle East. As a result, investors, developers and offtakers would benefit from a range of financing mechanisms, for a range of technologies and that can be deployed across a range of timeframes, so they have as many options as possible to tackle the challenges that the energy sector is currently facing, and will eventually face.

“We’re in a very uncertain world, and I think that Europe needs to pause and, for a second, look at what we’re rally going to do to de-risk, or remove, our over-dependence on single source for our power or our energy,” he says. “There’s no question that this is not about decarbonising or climate change—although climate change is not going away and it’s the single biggest threat we face on the planet—but the economics of renewables are winning out.

“We just need to ensure that we remove the barriers to deploying more renewables, so Europe can produce more and more indigenous generation, but not at an excessive cost.”

Maguire will be speaking at this month’s Renewables Procurement & Revenue Summit, to be held from 20-21 May in London. Hosted by PV Tech publisher Solar Media, the event will cover PPA design, tackling high energy prices and more; for more information, including the full agenda and ticket options, visit the event website.